Five major Philippine business groups on Thursday expressed support for the Securities and Exchange Commission’s (SEC) proposal to impose term limits on broker directors of securities exchanges, citing the need to bolster governance and investor confidence.
The statement was signed by the Institute of Corporate Directors, Financial Executives Institute of the Philippines, Management Association of the Philippines, Capital Markets Development Foundation Inc. and Investment House Association of the Philippines.
The organizations said in a joint statement the move would help reinforce board independence, curb conflicts of interest and enhance the credibility of the country’s capital markets. The groups said that introducing reasonable tenure limits represents a constructive step toward reducing potential risks and improving the securities exchange system.
The statement noted that securities exchanges perform critical oversight functions as self-regulatory organizations under the Securities Regulation Code. Because these entities supervise brokers and monitor trading, the groups noted that their governance is a matter of public interest.
According to the business groups, the SEC holds broad authority to regulate exchange governance frameworks. They described term limits as a “prudent” measure to address concerns such as undue influence and regulatory capture.
“Term limits do not diminish shareholder choice—they activate it. They ensure that the right to vote is exercised on a continuing basis, with stockholders periodically selecting from among other qualified brokers to bring fresh perspectives and renewed accountability to the board,” the statement read.
Under the SEC draft rules, broker directors would be elected for 1-year terms but limited to a maximum cumulative period of 10 years, whether consecutive or intermittent. A broker director who has served a total of 5 years must also observe a 2-year cooling-off period before seeking the position again.
The groups said these limits would prevent the concentration of power, promote board renewal, and allow more brokers to participate in exchange governance.
“These measures safeguard against entrenched interests and reinforce the integrity of exchanges as both market operators and regulators,” the joint statement said.
